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Thursday, November 1, 2012

A New Case for Spot TV & Local Cable

Over the last few years, I have received much e-mail saying that I am unfair to local broadcast (spot TV) on the pages of this blog. Obviously, I do not agree. What I tried to point out is that all forms of television have lost a few steps as an advertising medium as commercial avoidance has accelerated via time shifting devices, channel hopping with a remote in hand, and now using one’s Smartphone during commercial breaks or even programming itself.

All this is true and is now part of the fabric of using the television medium for advertising. In recent months, however, I have seen something else happen that may make the local versions of TV both in spot broadcast and local cable more attractive to large advertisers.

There are 210 Nielsen Designated Market Areas (DMA’s) in the United States. Market #1 is New York with nearly 7.4 million TV households and Market #210 is Glendive, Montana with just over 4,300 households. When an advertiser buys 1,000 rating points on national network TV, they average 1,000 point across the 210 markets. But delivery is not consistent. In smaller markets ratings can be significantly higher and in larger markets where there is more to do, ratings tend to be lower. For many years, marketers would take that in to account and supplement their network TV buys in the top 20 DMA’s across the country and in other areas of sales strength or potential.

On top of that, just as network TV delivery varies, so do product sales on an index basis across the 210 markets. Colgate toothpaste may be fairly flat but most brands have real pockets of strength and other DMA’s show significant sales weakness. Years ago, media planners were trained to do exhaustive breakdowns of sales data. If a DMA had low network delivery but positive sales potential, a spot TV buy would take place even in fairly small markets. The idea was to squeeze every possible case sale out of your distribution universe.

Now, when you talk to young media strategists, they laugh when you bring such a topic up. I have heard or received comments such as “network will take care of it or why should we chase down a few extra sales in Green Bay?” In days gone by, network TV was always twice as efficient on a per eyeball basis as spot TV. Not so any longer, my friends! As network pricing marches upward almost every year, there are many DMA’s in the Midwest in particular that have not seen meaningful price increases in years. So, the efficiency advantage that network TV had is not nearly as great as it once was. And, sales still are like a rollercoaster in terms of DMA by DMA volume along with volatile local market media delivery.

That is why I remain convinced that some of the best conventional media execution takes place in smaller shops on the back roads of American advertising in places like Burlington, Louisville, Akron, or Salt Lake City. A young planner in a mid-sized mid-western shop writes to me often about how he tries to optimize his budget in the 12 DMA’s where his largest client advertises. His boss does not appreciate what he is doing but I always try to give him constant encouragement. He may have limited resources compared to his colleagues in larger cities but he is not afraid to work and get things right.

The same is true with local cable. When one makes a national cable buy, is delivery flat? Take a look at Birmingham, Alabama’s ESPN delivery and compare it to the ratings that premier network delivers in San Francisco. You will be surprised at the spread.

So, local cable also suffers in many DMA’s as it does not get supplementary weight to make up for a shortfall in national network buys or pockets of unusual sales strength.

Would this require more work by the national agency or buying service? You bet. But the rewards in stronger sales could be substantial.

If you are an agency person reading this, consider what I have said. If you are a client, see how closely your agency tries to match delivery to sales, sales potential, or maybe find pockets of very efficient buys in excellent markets for your brand. If you are network affiliate or local cable sales executive, you may be frustrated and rightly so. You are selling a product that may be underutilized by allegedly sophisticated marketers.

If you would like to contact Don Cole directly, you may reach him at doncolemedia@gmail.com

About Me

Don Cole has been a media analyst for over 40 years. He was a media director and partner at Doner and Moroch and worked at two other agencies plus Arbitron.
His focus with this blog will be to discuss the rapid changes going on in the advertising industry and especially its impact on broadcast TV, cable TV, and mid-sized and smaller ad agencies.
Don is available to consult or to speak to your organization on a wide variety of topics.